Main Roads Reconstruction Project

Project Description

Provision of a sovereign loan to Montenegro for the benefit of the Transport Administration ("TA"), former Transport Directorate of the Ministry of Capital Investments ("MoCI"), former Transport and Maritime Affairs of Montenegro). The loan will be divided into three tranches. Tranche A in the amount EUR 10 million will finance the construction works and works supervision for the rehabilitation of the Rozaje - Špiljani road section. Each of Tranche B and Tranche C in the amount of EUR 15 million will finance the construction works and works supervision for the rehabilitation and upgrade of the Danilovgrad - Podgorica road section and Tivat - Jaz road section

This Project consists of 3 components.
Section 1: Rozaje - Špiljani road rehabilitation was Board approved on 1 Nov 2017 and signed on 7 December 2017;
Section 2: Danilovgrad - Podgorica road section reconstruction and widening was approved and committed on 13 Dec 2019.
Section 3: Tivat - Jaz road section reconstruction and widening is currently uncommitted, and is to be approved in May 2021.

From the environmental and social perspective, the three road sections have been categorised by the Bank as follows: Rozaje - Spiljane road section is Category B, while Tivat - Jaz and Danilovgrad - Podgorica road sections are both Category A.

The Project is part of a wider programme to rehabilitate twelve main road sections, with a total length of approximately 216.3 km, of Montenegro's main roads network, which will be parallel-financed with the European Investment Bank (EIB).

Project Objectives

- Support of Montenegro's economic development and contribution to its cross-border integration by improving connectivity between its main cities and between Montenegro and neighbouring Serbia.

- Improvement of the road infrastructure and services between Tivat Airport and the country's main tourist destinations near the city of Budva on the Adriatic coast, facilitating the flow of goods and domestic and international tourists, and reducing transportation costs.

Transition Impact

ETI score: 61

- The Project will support Montenegro's internal and external integration by improving connectivity between its main cities and between Montenegro and neighbouring Serbia. The Project will improve the road infrastructure and services between important tourist destinations along Montenegro's Adriatic coast facilitating the flow of goods and people, and reducing transportation costs.

- In line with the Green Economy Transition (GET) approach, the Bank is engaged with the Client in the identification of key climate risks, the vulnerability analysis of the road sector to climate change and the integration of structural and non-structural climate measures in the Project in order to increase resilience of the investments and contribute to improved management of the impacts of future climate change.

Client Information

MONTENEGRO SOVEREIGN

The Borrower is the Government of Montenegro represented by the Ministry of Finance. The client is Transport Administration, responsible for construction, maintenance and operation of Montenegro's national and regional (main) road network.

EBRD Finance Summary

EUR 40,000,000.00

A sovereign loan of up to EUR 40 million divided into three tranches as follows:

Tranche 1: EUR 10 million
Tranche 2: EUR 15 million
Tranche 3: EUR 15 million

Total Project Cost

EUR 52,660,000.00

The latest total Project cost estimation is at approximately EUR 75.0 million.

Additionality

Montenegro continues to rely on IFI financing or grants for the implementation of the necessary investments in the infrastructure sector.
Provision of financing on reasonable terms, matching the asset life, which cannot be made available.
Sector knowledge and experience, policy dialogue relationship with the authorities.
Compliance with the Bank's environmental and social policies and Procurement Policies and Rules.

Environmental and Social Summary

The rehabilitation of the Rozaje - Spiljani road section near the border with Serbia, which will be financed by Tranche A of the Bank's loan, has been categorised B in accordance with EBRD's 2014 Environmental and Social Policy (ESP).

The rehabilitation and upgrade of the other two sections, Podgorica - Danilovgrad and Tivat - Jaz to be financed by Tranche B and Tranche C of the Bank's loan, have been categorised A and have undergone a separate due diligence involving preparation of an Environmental and Social Impact Assessment (ESIA) disclosure package for each section and a 120-day public consultation. Each submitted separately to the Board for no-objection approval.

There are Environmental and Social Impact Assessments available for the Danilovgrad-Podgorica road section and for the Tivat - Jaz road section.

Tranche A - Rozaje - Spiljani road section

The Project involves partial re-alignment and upgrading of a 20 km long section of an existing two-lane road that requires widening from 6.0 m to 6.5 m, with an additional lane of 0.3 km to be built at the border crossing Dracenovac, and rehabilitation of 12 existing road tunnels (approx. 1.7 km in total length) with drainage works and safety improvements. Any adverse environmental and/or social impacts are site-specific and can be readily identified and mitigated through the road design solutions, good construction practice and the implementation of mitigation measures.

An initial site visit to the Project was undertaken by ESD, followed by Environmental and Social Due Diligence (ESDD) that was carried out by independent consultants, which included a review of the existing Project documentation, detailed road designs, a site visit and meetings with the Client to assess the Project against applicable EBRD Performance Requirements (PRs). A Road Safety Audit has also been carried out for Rozaje - Spiljani road section and its recommendations will be addressed in the final design of the road.

The rehabilitation of the Rozaje - Spiljani road section is expected to improve road and community safety, including improved lighting and signage, strengthening and revitalising bridges and tunnels, fences and safety nets for the rocks, introducing new bus stops and potentially new side stops/rest areas. The Client does not yet have a formalised environmental and social (E&S) management system in accordance with ISO 14001, however, for this Project, they will form a Project Implementation Unit that will have internal capacity with dedicated E&S responsibilities.

The ESDD ascertained that the Rozaje - Spiljani road section does not require an EIA under the EU EIA Directive, and the local competent authorities concluded that a local EIA is not required. Cumulative and transboundary effects on air, noise, water quality and road safety were assessed in the Strategic Environmental Assessment (SEA) in the context of other developments in the Municipality of Rozaje and reflected in the project mitigation measures following ESDD.

The ESDD identified that the environmental footprint of the Rozaje - Spiljani road section will not be significant and that the existing road section will not have impacts on any sensitive protected areas or archaeological sites. No designated nature conservation sites are present within the project location itself and the nearest EMERALD site is the Hajla Mountain, located 6 km south of the project site. The Project will not affect this site directly and significant indirect effects are also unlikely. Pre-construction checks shall be conducted in the project area to avoid and manage any potential impacts on Annex I habitats of the EU Habitats Directive. The environmental risks of this project also relate to potential run-off to watercourses, and the final road design will also need ensure at a minimum that drainage from the road should be sealed and treated before discharge at all locations where the run-off could enter the Ibar river and its tributaries or other water bodies to prevent any impacts on the aquatic environment. These potential biodiversity have been identified and adequately addressed through actions in the ESAP.

The main social impacts are expected to be related to expropriation of some land and assets (no physical displacement is required), health and safety including road safety, access arrangements, dust and noise during construction, and noise during operation, which are readily managed with standard mitigation measures. The rehabilitation of the Rozaje i Spiljani road section does not include installation of footpaths to improve pedestrian safety, and further solutions will be sought by TD in cooperation with the local authorities to address and improve the situation for the pedestrians, particularly in the areas of local schools and bus stops.

Most of the land required for the project works is state-owned, however some limited economic displacement within the Project is likely to occur in close vicinity of the road and will affect some business parking areas, front gardens (including some trees and possibly some cultivated areas) and fences/walls for houses. No informal land occupancy has been identified in the project affected areas. TD has previously produced a Resettlement Policy Framework (RPF) in line with both Montenegrin and EIB requirements for several other road sections. Given the existence of the RPF, and the relatively small footprint of the project, TD will need to develop and implement a Land Acquisition & Livelihood Restoration Plan (LALRP).

A comprehensive Environmental and Social Action Plan (ESAP) has been developed and agreed for the Project to address the ESDD findings to ensure the Project is structured to meet EBRD PRs. Some elements of the ESAP (mainly related to road safety, environment, health and safety risk management, stakeholder engagement and monitoring during constructions stage) will be also addressed through the Project supporting TCs. The ESAP requirements focus on: adequate environmental and social pre-construction surveys, detailed analysis of impacts and development of specific protection/mitigation measures, evaluation of hydrogeological risks from tunnel reconstruction and managing run-off to watercourses, evaluation of impacts on natural resources, a biodiversity management plan, worker accommodation, preparation of a LALRP and grievance mechanisms for both workers and other stakeholders. A Traffic Management Plan (TMP) will be required for construction phase, and Occupational Health & Safety (OHS) Plans will be required for both construction and operation in line with OHSAS 18001 requirements. The corresponding ESAP actions and measures will be incorporated into the design and build contractors requirements. The Contractor will produce a Construction Environmental & Social Management Plan (CESMP) to address these requirements as part of good construction practice, and its implementation will be monitored by a Supervision Engineer, to be engaged by TD under a separate contract. TD will require a chance finds procedure to be implemented by the Contractor. For operation, an Operations Environmental & Social Management Plan (OESMP) shall also be produced. A Stakeholder Engagement Plan (SEP) has been prepared for the project to ensure consistent engagement with any affected stakeholder in accordance with PR10, including some appropriate engagement with and notification of the Serbian counterparts although no major transboundary issues have been identified during the ESDD.

The development of detailed environmental and social mitigation and management plans satisfactory to the Bank will be a condition precedent to disbursement of the Bank's loan prior to any construction activity. Further details on environmental and social issues are included in the Non-Technical Summary of the Project, and it will be disclosed to the public alongside SEP and LALRP on TD's website and as part of the Bank's Project Summary Document. The Bank will closely monitor the project implementation through annual E&S reporting, ESAP implementation progress and monitoring visits to the Client, if necessary.

Non-technical summary (NTS) in English

Stakeholder Engagement Plan (SEP) in English

Tranche B - Update for the Danilovgrad - Podgorica Road Section

The Danilovgrad-Podgorica road section includes the reconstruction and widening of the existing road from 2 to 4 lanes over 10km, hence this Project is categorised A under EBRD's Environmental and Social Policy (2014). The Bank's environmental and social due diligence ("ESDD") was conducted accordingly with the support of several independent consultants and included documentation reviews and site visits.

The Project Environmental and Social Impact Assessment ("ESIA") disclosure package includes the local EIA, a Supplementary ESIA, Non-Technical Summary, Stakeholder Engagement Plan ("SEP"), the Land Acquisition and Resettlement Framework ("LARF") and Environmental and Social Action Plan ("ESAP"). These were disclosed for a 120-day public consultation on websites of TA and EBRD on 29 July 2019 and can be found at https://uzs.gov.me/projekat-ebrd/Podgorica_Danilovgrad. Hardcopies have been made available at the TA offices locally and EBRD's RO in Podgorica.

The project has been subject to the national Environmental Impact Assessment ("EIA") process, and EIA was approved by the competent authority in July 2019. The Project is intended to improve traffic flows (thereby reducing journey times) and road safety (for both drivers and pedestrians). Road drainage will be improved to reduce flood risk and run-off rates of contaminated water onto the surrounding land and into adjacent watercourses.

The Client will develop and implement a Project Environmental and Social Management System ("ESMS"). A series of mitigation and management measures have been identified for all the project phases. A number of these measures require that the Contractor prepares Specific Environmental Management Plans ("S-EMP") before the start of construction activities such as Construction Management Plan; Labour and Working Conditions Management Plan; Spoil Disposal Management Plan and a Biodiversity Management Plan.

There has been extensive engagement activity including one to one interviews, group discussions, socioeconomic household surveys and community meetings carried out during the development of the Project as well as two ESIA consultation meetings. Concerns raised were related to access restrictions to properties and businesses, land acquisition, project nuisances and pedestrian and school children safety impacts during construction.

The route alignment is the existing one and does not cross any known protected areas. The description of the existing biodiversity baseline and conservation status of the Project area has been developed through a combination of desk based studies, expert consultations, and site surveys. In particular, the work included a biodiversity assessment with targeted surveys conducted throughout 2019. These documents have identified the following sites, species and habitats that require special conservation measures to be put in place for them during construction and operation: locally designated sites ("Mareza source with Sitnica and area of Velje Brdo"); the rivers Susica, Sitnica Matica and Mareza; European Otter and Bats, Notable Amphibians including Albanian Water Frog, Notable Fish: Soft mouthed trout and European eel, Notable Invertebrates including endemic freshwater snails and white-clawed crayfish. A Critical Habitat Assessment has been carried out for the project, which concluded that there are species in the area that have the potential to trigger Critical Habitat (freshwater snails). To address this and meet PR 6 requirements, a Biodiversity Action Plan ("BAP") has been prepared and disclosed as part of the ESIA package. The BAP will be used to enable the project to avoid, minimize and/or mitigate impacts to species and habitats of conservation importance. The BAP includes appropriate biodiversity offset mechanisms to achieve No Net Loss of Priority Biodiversity Features in line with EBRD requirements. A number of precautionary action plans have been prepared as part of BAP to help ensure that the Project results in "no net loss", or in the case of the freshwater snails where Critical Habitat has been identified, "net gain" to the conservation value of these habitats and species. These action plans are referenced in the final ESAP and will need to be further updated and implemented upon further pre-construction surveys by the Client, which may include safe passages for the affected habitat in the road design prior to start of construction works.

Relevant risk assessments in relation to climate change impacts have shown limited overall risks to the project.

The Project will involve limited physical and economic displacement. To this end, the LARF was prepared and publicly disclosed. A separate Land Acquisition and Resettlement Plan ("LARP") will be prepared and implemented by the TA prior to the start of the civil works. Land acquisition/resettlement is financed by the Government of Montenegro. So far, 349 expropriation cases have been opened out of a total number of 551 expected parcels (474 private owners and 77 businesses) of approx. 157,000 square meters in total. Some residential houses will be affected and three business structures will need to be completely or partially removed. The implementation of LARP, once developed by TA, will be regularly monitored and verified through the Completion Reports prepared by the external implementation support and monitoring consultant.

During the construction phase, the Contractor is expected to employ several hundred construction workers, and any temporary accommodation and welfare facilities (construction camps or private dwellings) for workers will be designed and constructed to meet requirements of IFC/EBRD Worker Accommodation Guidance Note 2009. To prevent any adverse impacts on the communities, the Contractor will also be guided by the respective WB and IFC guidance and good practice notes, including on gender based violence. The core requirements of the EBRD Performance Requirement 2 will also be cascaded down across all contracting chains, including subcontractors, and monitoring by the Bank will be conducted.

An independent Road Safety Audit for the Project has been conducted during the design phase and its main recommendations have been addressed. Further effort by RSA consultants is currently ongoing to further enhance pedestrian/school children safety arrangements via a continuous safe pathway along the upgraded road, and specific provisions will need to be included in the detailed design.

Noise modelling carried out as part of the ESIA work indicates that noise mitigation is required for the road. A Noise and Vibration Management Plan for construction will be provided by the contractor, and during the pre-construction phase the Owner's Engineer shall undertake further noise modelling to determine the specification and precise locations for any noise barriers and to reduce the number of affected properties along the route.

Assessment of air quality issues conducted as part of the ESIA indicated that no elevated sensitivity receptors in terms of air quality have been identified along the route of the road. No cultural heritage impacts have been identified in the Project area. However, as a precaution, the Contractor will adopt a Chance Find Procedure prior to the start of construction works.

The current SEP includes requirements for public engagement during the pre-construction and construction period, including a grievance mechanism.
The ESAP agreed with the Transport Administration includes, among others, the requirements: to further improve its internal environmental and health and safety management systems in line with ISO 14001 and OHSAS 18001/ISO 45001 requirements; to develop HR policy in line with PR2; to implement a Contractor oversight plan including appropriate monitoring and enforcement of EHSS and Labour requirements; to prepare a Traffic Management Plan (TMP) for the construction phase; for the contractor to develop and implement a Construction Environmental & Social Management Plan (CESMP), as well as to implement requirements contained in BAP, LARF and LARP and SEP. In addition, mitigation measures require that the Contractor and the Owner's Engineer employ a number of professionals such as an Ecological Clerk of Works and Biodiversity Specialists. The TA is also required to ensure Contractor (and subcontractors) transpose relevant elements of the SEP into their own plans of work, as reflected in contractual agreements as well as review and improve the Grievance Management Process.

The independent implementation support consultants will undertake regular audits of the Project to assess EHSS performance during construction in accordance with the Bank Performance Requirements. The Bank will also monitor the Project through quarterly reporting during construction phase, annual E&S reports and carry out site visits, if and when required.

Tranche C - Update for the Tivat - Jaz Road Section

Tranche C comprises the rehabilitation and expansion of the Tivat to Jaz main road (the M-2), situated at the coastal region of Montenegro, and involves widening the existing two-lane road to create a four-lane road with two-lanes in each direction (each lane being 3.25 m wide). The upgraded road will include a 2m wide central reservation as well as 2m wide sidewalks and a vegetated verge. As the road section includes the reconstruction and widening of the existing road from 2 to 4 lanes over 10km, this Project is categorised A under EBRD's Environmental and Social Policy (2014). The Bank's environmental and social due diligence ("ESDD") was conducted accordingly with the support of several independent consultants and included documentation reviews and site visits.

Hardcopies have been made available at the TA offices locally and EBRD's RO in Podgorica.

The Project Environmental and Social Impact Assessment ("ESIA") disclosure package includes the local EIA, a Supplementary ESIA, Non-Technical Summary, Stakeholder Engagement Plan ("SEP"), the Land Acquisition and Resettlement Framework ("LARF"), Framework Biodiversity Management Plan ("F-BAP") and Environmental and Social Action Plan ("ESAP"). These were disclosed on websites of TA and EBRD on 7 August 2020 and can be found at https://uzs.gov.me/projekat-ebrd/Tivat_Jaz. Hardcopies have been made available at the TA offices locally, three local communities along the road and EBRD's RO in Podgorica. A consultation report will also be published following completion of the public disclosure period.

The project has been subject to the national Environmental Impact Assessment ("EIA") process, and EIA was approved by the competent authority in April 2020. The Project is intended to improve traffic flows (thereby reducing journey times) and road safety (for both drivers and pedestrians), as well as climate resilience through reduced vulnerability to flooding and high temperatures.

The Client is in the process of developing and implementing an Environmental and Social Management System ("ESMS") with the support of E&S consultant. A series of mitigation and management measures have been identified for all the project phases. A number of these measures require that the Contractor prepares construction Environmental and Social Management Plans ("CESMP") before the start of construction activities such as Construction Management Plan; Labour and Working Conditions Management Plan; Spoil Disposal Management Plan and a Biodiversity Management Plan.

There has been extensive engagement activity including one to one interviews, group discussions, socio-economic household surveys and community meetings carried out during the development of the Project, with 22 stakeholder engagement meetings, including also 4 EIA/ESIA consultation meetings. The necessary Covid-19 related measures have been adopted to make sure there is a continued stakeholder engagement. Concerns raised were related to access restrictions to properties and businesses, disruptions during construction, land acquisition and livelihood restoration, standard project nuisances (noise, traffic, impacts on local flora and fauna, flooding), overall road design (location of roundabouts and crossings for people and livestock), and pedestrian and school children safety impacts during construction.

The project involves an upgrade to an existing road, and its route alignment does not cross any known protected areas, hence and ecological sensitivities are considered to be generally low. The exception is local watercourses, which support a number of uncommon species (including the critically endangered, European Eel) and the Tivat Saline Ramsar site and Special Nature Reserve / protected area, which is designated as Critical Habitat, located some 300m from the road at its closest point. These will be protected through mitigation measures designed to avoid pollution of watercourses, including upgrade to the road drainage systems. The description of the existing biodiversity baseline and conservation status of the Project area has been developed through a combination of desk based studies, expert consultations, and site surveys. In particular, the work included a biodiversity assessment with targeted surveys conducted throughout 2019 and 2020. A Critical Habitat Assessment has also been carried out for the project, which concluded that there may be species in the area that have the potential to trigger Critical Habitat. To address this and meet PR 6 requirements, a Framework Biodiversity Action Plan ("F-BAP") has been prepared and disclosed as part of the ESIA package. The F-BAP will be used to enable the project to avoid, minimize and/or mitigate impacts to species and habitats of conservation importance. The F-BAP includes appropriate biodiversity offset mechanisms to achieve No Net Loss of Priority Biodiversity Features in line with EBRD requirements. Precautionary action plans have been prepared as part of F-BAP, and these are referenced in the ESAP and will need to be further updated and implemented upon further pre-construction surveys by the Client. Impacts during construction will be reduced through the use of GIP and contractors will be required to develop and implement a construction phase Biodiversity Management Plan. Operational impacts, such as habitat fragmentation, will be reduced by the provision of appropriate crossing points for fauna (e.g. culverts). Overall, residual impacts are not expected to be significant.

Relevant risk assessments in relation to climate change impacts have shown limited overall risks to the project. The design of the road takes into account the associated flood risks and includes relevant solutions such as, for example, improved surface water drainage systems, adjusted bridge design, reinforcement of the road embankments and surfaces, to make this road more climate resilient.

The Project will involve limited physical and economic displacement. To this end, the LARF was prepared and publicly disclosed, followed by a separate Land Acquisition and Resettlement Plan ("LARP") that has also been prepared, will be disclosed and will be implemented by the TA prior to the start of the civil works. Land acquisition and livelihood restoration in compliance with EBRD PR5 will be financed by the Government of Montenegro. The Expropriation Study identified 661 land plots to be expropriated (424 private owners (36%), 112 businesses (36%) and 125 from government agencies and municipalities) of approx. 16.89 hectares in total. The formal decision that the Project is in the public interest, announcement of cut-off date and associated publication of data from the Expropriation Study has already taken place. Additionally, socio-economic surveys have been completed and identified 102 businesses and 106 households within 50 metres of the existing road that may be significantly affected by land-take. So far, only two (2) households will require physical resettlement to new housing, while loss of significant livelihood and business assets are expected to be limited with access to properties maintained. No main business buildings are within the expropriation corridor, and the most significant losses are expected to be parking areas and some gardens and agro-pastoral assets that are within the new road footprint. The implementation of LARP will be regularly monitored and verified by the external implementation support and monitoring consultant.

An independent Road Safety Audit (RSA) for the Project has been conducted in 2018 during the design phase and its main recommendations have been addressed. A supplementary Traffic and Pedestrian Safety Report for Tivat-Jaz section has been prepared by an independent RSA consultant in December 2020, and specific provisions such as additional pedestrian crossings will be included in the detailed design to further enhance pedestrian safety. Through the ESAP provisions it has been agreed that the Client will include into the Contractor requirements the obligation to update the Project's design in full accordance with the Traffic and Pedestrian Safety report recommendations.

The current SEP includes requirements for public engagement during the pre-construction and construction period, including a grievance mechanism and is addressing potential Gender Based Violence and Harassment issues.

The ESAP agreed with the Transport Administration includes, among others, the requirements: to further improve its internal environmental and health and safety management systems in line with ISO 14001 and OHSAS 18001/ISO 45001 requirements; to develop HR policy in line with PR2; to implement a Contractor oversight plan including appropriate monitoring and enforcement of EHSS and Labour requirements; to prepare a Traffic Management Plan (TMP) for the construction phase; for the contractor to develop and implement a Construction Environmental & Social Management Plan (CESMP), as well as to implement requirements contained in F-BAP, LARP and SEP. In addition, mitigation measures require that the Contractor and the Owner's Engineer employ a number of professionals such as an Ecological Clerk of Works and Biodiversity Specialists. The TA is also required to ensure Contractor (and subcontractors) transpose relevant elements of the SEP into their own plans of work, as reflected in contractual agreements as well as review and improve the Grievance Management Process.

Technical Cooperation and Grant Financing

The following Technical Co-operation assignments are envisaged as part of this project:

Works supervision;
Project implementation support;
Preparation of a Study on improvement of public transportation and preparation of tender for a multi-year distribution of public lines;
Development of a Strategy for Climate Change Adaptation in the road sector;

Environmental and Social Management System development and implementation.

Company Contact Information

NikolaArnaut
nikola.arnaut@uzs.gov.me
+382 67 265 625
+382 20 655 359
Transport Administration (Uprava za saobracaj), IV proleterske 19, 81000 Podgorica, Montenegro

PSD last updated

22 Apr 2021

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Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

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